Weekly Stock Market Video and Commentary

As we finish up May, it has been clearly evident that this mkt. is showing glaring signs of weakness. However, I am still anticipating another run up. I certainly could be way off base, and this may be the beginning of a big drop, but I just think that the bulls have one more shot in them before getting taken out to the woodshed. The 200 ma has been taken out by most of the indices, and looks to now play the role of resistance. However, the more it gets tested AND breached, the less of a factor it will become. There is a distinct possibility of a head and shoulders pattern set up on the SPX, and that would require another leg up from where it is now. All in all, the VIX remains high, the v will likely shrink into the summer, and there is a lot of bad news out there, so I think we will continue to see very volatile days, weeks and months. Now onto this week’s video.

Trade the opposite of the end of day move: Will it continue to work?

Once again, what looked like a promising up day early on was sold off faster than oil pumping into the gulf of Mexico. I was actually looking for some buying into the close and got spanked intra-day because of it. There has been a strong pattern of eod moves every day the last couple of weeks and I expect it to continue. Volatility is still very high, but not extremely high. Some of those eod moves were in the last 20 minutes. Looking back almost every eod move has been followed with an opposite move the next day, so here I go once again! I am looking for an up open tomorrow, but I also realize the claims numbers come out an hour before the mkt. Last week I would’ve told you to be cautious about this data, but after seeing the sell off soon after great housing numbers today, I don’t think it really matters this week. Now for a couple quick charts:

The INDU closed beneath 10k, but what is even more interesting to me is the volatility and uncertainty of the last two days. From highs to lows over the last two days it has moved over 400 points. Yesterday’s hammer looked like a clear reversal, but it was followed by a candle with a giant wick, not so bullish. There is very strong resistance at 10,200, and I don’t expect it to be broken easily. Despite the huge moves, it actually looks a little sideways to me.

The SPX also looks sideways to me. However, it looks like a plank walker as well. If it continues to move sideways like this without any up movement, then I think it is getting ready for a big drop.

The NAS rallied right up and through the 200 ma, but was unable to close above it. It also nearly closed that gap, something I missed today, and that would’ve been an obvious stall spot. I think if it is going to move back above the 200 ma, it will gap above it, or have a very large candle body. Until then the 200 ma will continue to be strong resistance. Strictly technically speaking, this chart would be screaming “short” to me. Perhaps I will be remiss to ignore it.

The RUT has managed to stay above the “flash crash” low, unlike the other indices. So it continues to show more strength than the big caps, at least for now. However, check out today’s candle, that my friends is a classic tombstone doji, a reversal candle. It is out of context however, so not as strong of a signal. Watch the 637 level, not so much intra-day, but for closes. If it closes beneath that and takes out that 200 ma, I will strongly consider moving all my retirement $ to cash.

All day, all week, all over all we hear is “financials, financials, financials” or maybe it is just the voice in my head. None-the-less, check out the XLF; Notice a pattern? Gap up move down, gap down move up etc. etc. So if this pattern is to hold here, and I see a gap down tomorrow, then I will be very tempted to go long the XLF again. Also note the v is declining into this down move, so it may be looking for a break back up to the 200 ma.

In closing: This week has not panned out the way I thought, but it has still been trade worthy. It also appears there are some patterns that we can use to determine the day moves. Remember, eventually all patterns fail, so don’t trade based strictly on past patterns, but trade when you see evidence those patterns are in effect. But most of all, trade well and prosper. AKOT

Still room to go……..down

The week is going pretty much as planned, but that doesn’t mean it will keep on that track. But if it does, what I will be looking for tomorrow is a gap up, maybe not huge but a gap non-the-less. Then I will be looking for that gap to be filled and then some, with some buying into the close. Again, there is a lot of support nearby, but I am not sure how strong it will be. I am convinced that the 200 ma will offer at least enough to stall out the move, if not cause a bounce. I know I was saying that I thought DOW 12k was a forgone conclusion, and it is still a possibility, but things are looking more bearish every day. If tomorrow turns out to be a big move like I think, then I will be looking for Friday to be maybe not so adventurous.

I was looking for the VIX to move up today and it did not disappoint. However, it obviously was not a strong move, with a huge sell off from the highs. The last gap down resulted in a four-day move before gapping up, today was day four in the current gap island. This makes tomorrow a prime for a gap.

The INDU briefly took out support, but was unable to close beneath it. The v was very good, and I think this makes it prime for another move beneath that support, perhaps closing right on it or right beneath it.

Note where the SPX bounced off, the 200 ma. It is starting to come into play already. However, that nice rebound has left a lot of room for this to head back down and re-test that 200 ma again. Note the last hanging man two days ago, what followed? A big down day.

The NAS closed beneath the minor support of the up trend line. It has a ways to go to get to the 200 ma. It looks even more poised to drop to me than the others. It has clear resistance right above at 2330.

The RUT continues to look like the NAS. It closed beneath two levels of support today, the channel top and the 678.50 line. What is scary about this chart is that there is free air until the support level of the “flash crash” near 640.

I like these quick re-tests of support as great short opportunities with clear stops. Once it moves beneath this support, and looks like it is beneath to stay, then I short.

That’s my BEBE took out the 200 ma on good v, I think it will fall to the gap fill.

In Closing: I know I keep talking about a drop for tomorrow, and I know that I could be 100 percent wrong, but that is how I am planning to trade tomorrow. The claims numbers come out an hour before the open, and for some reason I am leaning to them being wte. But that goes against my perfect play which would be a gap up, or a move up right after the open. At that time I will be going short at the first sign of weakness. IF it does not look good, I will change may game plan and change it quickly, and I advise you to do the same. Trade well and prosper. AKOT

Quick Update

I just rolled in once again, so I am going to keep this short tonight. I was expecting some up movement, maybe not quite 400 points up, but it was still very playable this morning. I got to trade until about 9:30 AK time and unfortunately I was unable to trade the last hour of the day, which was phenomenal today. I hope you guys all caught it. My thought was that we would have a couple of moderate up days, but today may have changed the picture for the rest of the week. One thing to note is that we are still under DOW 11k and depending on the morning news, I expect a bit of down open tomorrow. If it does gap down, I will likely trade the futures long for a bounce. I think this was too much euphoria today to be sustained. It would’ve been healthier to have a +100 point day today, but like I have said, volatility seems to be back in action. so I am expecting a bit of a pullback tomorrow, perhaps just enough to go long on Wed. Chart time.

The VIX has moved back into the gray square of consolidation. Note that today was a doji star, which could signal a bounce from here. However, if you look at the VXN……

It looks decidedly more bearish. So this could signal a conflict tomorrow between the SPX and the NAS. Looking at this, and this alone, I would say that the NAS should continue up tomorrow. But that’s why we look at several things.

The COMPQ had a great gap up today, but note that not much happened after the gap. It was like the first stage of a rocket launch with a failed second stage. No follow through is not usually a good sign. Ergo, it makes me a little cautious to be long NAS stocks.

Meanwhile the RUT looks a little stronger like the others. It broke out to the March resistance levels and out of the up channel once again. However, I don’t trust straight up moves, and this is stick straight.

In closing: Watch the morning pre-open news, and I am leaning towards a down open. Personally I am enjoying having some volatility back in this mkt. after the last 9 months we had to endure. I will be late again tomorrow night, and then gone the rest of the week. You all will have to pick up the slack. Trade well and prosper. AKOT

Is tomorrow Thursday?

All right so you are thinking man he missed that call today, but did I really? Remember I had my days wrong and yet I was looking for the gap up off of the good jobs numbers. Well that catalyst wasn’t there today, but it still pretty much ran as expected. Instead of a gap up, it gapped down and then rallied right back up to the zero, before selling off. The exact type of move I was looking for today, but in reverse. Now things have changed a bit for tomorrow. It seems like most of the indices are very close to support and it makes sense to me to see a positive move tomorrow, possibly even a big one. But I would expect more of a moderate move up. I still expect the data tomorrow pre-open to be bte, and depending on what happens with the euro and Greece, that should be enough to push this thing up a bit. I would expect some selling off of any big move up intra-day, so it could be one of those really up and down type of days, really hard to trade intra-day. Oh yeh, remember those SPY calls, well I sold them about 30 minutes in for a .40 loss per, manageable. If I had held em longer I would’ve actually got out even to up a little, but believe me I was happy with what I got, after my idiotic error last night.  Chart time:

Well I thought we would see a black candle today, I just didn’t think it would be this far above yesterday’s white candle. I think this wants to drop a little more, maybe to the 22 area.

The SPX formed a spinning top doji today, not the strongest of reversal signals. It also went below the 50 ma today, but did not reach support. Yet I could still see this bouncing a little from here.

You can see the NAS has pretty much the same thing going on here. Still it dropped a little more percentage wise than the SPX. Usually when it moves out of the bollinger bands like this, it tends to make a move back in, at least a little.

The RUT was once again the leader, falling over 1.5%. It stalled out on the bottom bollinger band and very near the 50 ma. This too looks ready for a little bounce here.

FSYS is sitting on support with bullish engulfing candle. Considering the overall mkt. this seems pretty bullish to me. I would use $27.25 as my stop on a long trade.

CAT too found support, but more on a long-term up trend and off the bottom bollinger band. Easy stop on break of the 50 ma.

In closing: There has a been a significant amount of selling lately, and I am looking for some value buyers to step in soon. If the data is good in the morning, and if things quiet down overseas, then tomorrow could be the day. I will be watching the EURO very closely as it has been tipping the hand of the mkt. all week. Trade well and prosper. AKOT

Throw some puts on the barbie ( some calls eod)

Wheeeeeee, today was a great day for traders. We like days like this, solid moves with all indicators clearly giving us a direction to trades. Throw some puts on the barbie and the odds are great that they will be profitable at the eod. You may have noticed a slight change in the tone and focus of this blog over the last few months. I can feel me doing it, but I can’t help it. I have started trading futures and I really like trading them, and I am doing well. I am still trading stocks and options, but I am really focused on intra-day futures trading, and I noticed I have focused more on next day moves rather than week-long or month-long prognostics. I am not inclined to change it, so whoop there it is. In that vein, I closed out a couple of short positions today, one of which was BKS, a chart I had posted a few weeks ago. But I did something odd, I bought a small position of SPY calls about 20 min. before the close. Again, there was really no charting element to this trade, it was just that “feeling” thing again. I could be burned big time as fear tends to feed on itself, but I saw a few things that led me to believe there may be a small gap up tomorrow, and I was willing to take a chance to get a piece of that move. So I will be looking for a gap up, probably off of bte continuing claims and initial claims numbers. In fact I hope we see an over exuberance, with numbers that just crush expectations. Because I will then shortly buy back those calls and promptly look to sell short some /TF. Let’s look at the charts:

Obviously the VIX was up big today, but one thing I noticed that edged me to the call buying was that there was a pretty good wick on today’s candle. About 1/2 the body was top wick. I also noticed that lately any big move on the VIX was followed by a down day.

The INDU slammed through the bottom of the wedge and through support on another decent v day. However, you can see it tagged the bbb, something it has not done in a while, and rallied off of it. Also the 50 ma looms fairly close and the logical support would be the up trend line. But I still like it for an open bounce tomorrow.

The SPX tagged the 50 ma and pulled back a little. Again, a good area for a stall out. Of course if it does break it tomorrow, which is a possibility ( after a gap up) then there is a lot of open air to the next true support.

If you recall, I have been saying for months that I felt the COMPQ and RUT will lead this mkt. down, so they bear watching. Percentage wise, this was nearly a whole percent lower than the last two we just looked at. It to is very near the 50 ma, and it too has a lot of open air underneath it. Chart wise I could see a few things fitting here, an inside harami day, a gap up into the day followed by some selling, or no gap and drop. I am NOT looking to take out yesterday’s open, I just don’t think this mkt. has the strength to do that right now.  But if you had to make me pick, I would be looking for the gap up into the candle followed by selling and closing lower than today’s close.

The RUT was down over 3%, again quite a bit more than the INDU or SPX, and even more than the COMPQ, all of which makes sense. You can see the clear breach and smashing of the 20 ma. You can also see this thing has a lot of clear air before it even gets close to the bbb or 50 ma. That 690 looks like a great place for a rebound.

I will finish with BKS. I was very fortunate here as I had been holding this for several days watching the premium eat away at my put options. I was looking for it to find some support on the 2o.80 line, which it didn’t, and then the 200 ma, which it didn’t. I closed it today because I thought it would definitely bounce from here. However, if it takes out the 200 ma again, I think it makes a great short to 17.75.

In closing: I expect the jobs numbers to be much bte tomorrow, and I expect that to induce the value buyers to do what they do best, buy. Then I will be watching for big $$ to step in and sell. There are tons of variables and we may see a 300 point rally tomorrow, but I don’t think so. If the jobs numbers come out wte, then you best be holding on because my SPY puts will be as worthless as excuses are to BP right now. Then it will be time to short and short fast. Trade well and prosper, AKOT.

Pieces of a bearish puzzle

And the ride continues. We haven’t even got to the big news of the week yet, that should be coming on Friday. The problem with news and big moves like we are just now starting to see is that quite often they can lead to ye olde buy the rumor sell the news trade. So I will be watching closely as we head into  Thursday / Friday. If this mkt. continues to move up like this, then the good news will more than likely be baked in, and my trade will most likely be a short, no matter what the news. However, that being said, I am leaning towards a down day tomorrow. I cannot really explain all the reasons why, but it is a combination of charts, news and experience. I will not trade strictly on this, I will be watching the first 15-20 minutes very closely to see how the day is lining up, and that will be my guide. Chart time:

I was expecting a pull back on the VIX, and we got it. Notice that it closed over half way above yesterday’s candle, and even rallied a bit from the bottom. This is one reason I think we may see some more down tomorrow. I think today’s low will hold, and may not even be tested. But that will be something to watch, and if it gives then obviously I will change my tune to a long trade day.

There are a couple things to point out in the INDU. I have put the indicators back on this chart to show you that the SRSI has offered support in the past. If it gives way, then I will be looking for a serious pullback, much like the one early in the year. Also notice the v, the two big up days are the two lowest v days. Finally, the candles are in another range, and the 20 ma has become inefficient support at best.

The SPX is still in fat wedgie. Now normally I would be looking for a breakout to the upside from here, but you can see the down trend appears to be the stronger move. Also if we take in account the v on the INDU, then we know there is not near the $$ behind the buying as there is behind the selling.

The NAS has been honoring this current down trend, and continued to do so today. I think that is a good indicator to watch to confirm more downside. I will be looking for sell-offs, followed by up days into that down trend. If they start falling away from that line, it is more bearish. If it closes above it, then I will consider going long in NAS stocks. Also watch the support on the RSI and note that the MACD is trending down. There are a lot of small bearish signals here, nothing huge but a lot of small pieces of a bear puzzle.

Speaking of the NAS, here is AAPL. It is in a bit of wedge, and is virtually mimicking the NAS, or should I say the NAS is mimicking it. Again, normally I would look for a breakout to the upside here. But yesterday was bearish engulfing candle, and today a bearish harami, again pieces of a bearish puzzle, so I am leaning to the downside here.

Another wedge here on BEN,  a post earnings wedge. I am leaning to the upside here, but if the mkt. tanks, this too will follow.

In closing: This week is setting up to be a an intra-day traders dream, and I really think Thurs/ Fri will be two very trade worthy days. I will be playing the ES, some of the individual stocks I have posted here and a couple of the indices, that is my game plan for this week. Trade well and prosper. AKOT

The tide turned in the form of a tsunami

Okay so yesterday I said the tide was changing, I didn’t expect a tsunami. Oh well, at least it was plenty tradeable for once. Volatility took off like a Goldman Sachs Executive leaving the senate hearings for a potty break. The indices are on some minor support, and the RUT still has room to go, but in my mind I would be extremely nervous if we have another 100 + point down day with no late day move up. I would not be surprised to see the mkt. open up or down, but I will be surprised if I don’t see some buying sometime tomorrow, and most likely near the end of the day. If it was Friday, I would be looking for selling, but it is not so I am not. If we have another big down day tomorrow, I think this mkt. may be in for a sustained big drop. Now some quick charts:

The VIX rallied right back up above the 200 ma, over 5 points in one day. That is a big move, even for the VIX. Now the 200 ma has not acted as support lately, but I don’t think it will give up this whole move in one day. I will be looking for a small pullback, as some sanity moves back in and value buyers scoop up some stocks. Then I think I will be watching for another pop.

The INDU took out the 20 ma in one swoop. You can see I have a lot of “minor” support beneath, and it is sitting on minor support from the recent twice tested lows. I think if this moves above the 20 ma tomorrow, it will likely close above the 20 ma tomorrow.

The SPX also took out the 20 ma without looking back. It too found support from the 4/19 lows. I don’t expect this to be strong support, and if it breaks beneath it and holds for a bit tomorrow, I will be looking for a lot more downside, with a few minor areas of support along the way.

The COMPQ landed smack dab on the 20 ma. This goes to show how much stronger it was than the “real” mkt. It rallied hard of the last test of the 20 ma, however last time the INDU and SPX were still above, so I am not sure it will be able to hold this time. The 2400 area looks like the strongest area of support to me.

The RUT was so much more over-bought than all the others that it still has a ways to go to get to the 20 ma. That being said, I don’t expect it to serve as support if the INDU and SPX continue to drop.

In closing: Like I said yesterday, the tide seems to be turning, and the big boys seem to be leading the sell off, this is dangerous for the whole mkt. and great for those of us who love puts n shorts. Watch the minor supports for good entries long and short, and keep an eye on the NAS to see if it can go against the grain. Trade well and prosper. AKOT

The indices are flopping

So today the tides have turned a bit, just a tiny bit. Instead of the INDU being pulled up by the NAS, it was the only one that managed to stay green today. So now what we have to watch for is to see if this is the tide turning and getting ready for the pullback. I was expecting a down Monday and Tuesday this week, and the re-assessing after the FOMC on Wednesday. I am still leaning towards a down Tuesday, especially if it gaps up a little. Usually mixed mkt. days like this are difficult to trade, but I have a feeling it will give us a nice entry point or two. Chart time:

The thing I noticed about the VIX is that it has had two long-legged days in a row with an up gap in between. That tells me that the volatility is increasing throughout the day and technically speaking, there is no reason for this rally to slow down.

The INDU looks to be topping here with a big wick today, but if you look back a few short weeks ago, it teased us with a similar set-up. In fact the past set up was even better with resistance, this one is after a breakout and therefore we should be looking to go long on a pullback to support.

The SPX held up on the top resistance of this long-term channel / pennant. It looks to be poised to re-test the 20 ma again, but watch for breakouts, and the COMPQ looks very similar to this.

ALL is in a bit of a flag and although it had a bearish engulfing candle today, I wouldn’t be surprised to see a breakout to the upside.

AMZN has found some support along with a bullish engulfing candle, so I am looking for a move up from here.

XLU has been in an up trend, but it is now back at the top and I am looking for a drop.

In closing: I don’t expect a huge move tomorrow, unless something leaks regarding the FOMC on Wed. , but I am still leaning to the down side. Watch the indices to see if they are truly turning over. Trade well and prosper. AKOT

Weekly Stock Market Analysis and Video 4-11-10

Well we got very close to DOW 11,000, maybe close enough to call it good, but I don’t think so. I think we will see another push up from SPX and COMPQ, which will drag the DOW with it. But, I also think that if we get a big one day move above DOW 11k, then I will be looking for a sell off that same day. If it is a gradual move, then I will be leaning to more upside. There are a lot of logical resistance areas nearby on all the indices, so a move in conjunction would be the best possible scenario for a sell off. I don’t think this will be the full change of direction, just another correction. Next week there is economic data every day, with Monday having the least impact and gaining every day peaking Thursday and Friday. On top of that there are some significant financial earnings and GOOG earnings on the docket, plus more. However, lately earnings haven’t moved the mkt. as much as in the past, but if GOOG comes in to the extreme either side, you can bet that will be a mkt. mover. The same holds true for big financial names. Now it’s video time: